Posted on March 17, 2017 by Charles Morris
One of the most exciting things about Elon Musk and Tesla is the can-do attitude, the feeling that this is a company that gets things done, bypassing or ignoring the red tape and “standard procedure” that seems to paralyze so many other companies (and governments). That ethos was very much on display during a public exchange of tweets leading to plans for Tesla to install a large-scale energy storage project in Australia.
Above: Tesla Powerpack (Image: Popular Mechanics)
The state of South Australia has had problems providing reliable electrical service during the peak summer season, culminating in a series of embarrassing blackouts. The state’s Premier, Jay Weatherill, has blamed the crisis on a “broken” National Electricity Market (the wholesale electricity market that covers much of the country), saying that utility companies are exploiting their market power to generate profits instead of serving the public (a situation that may sound familiar to residents of several US states). “We have a system that puts profits before people,” Weatherill told reporters. “It is a disgrace. They chose to black out South Australia instead of turning on a power station.”
Above: Solar installations in South Australia (Image: PV Tech)
To address the problem, the state government announced a $500-million package of measures that includes new renewable energy plants, supported by several forms of energy storage (it also includes incentives for more natural gas production, but some journalists have called this a sop to conservative politicians, saying that the falling cost of renewables has already put gas “out of the money”). Increasing renewable generation will help to secure the state’s energy supply for the future, but what’s needed to deal with the current crisis is a battery storage solution that can be brought online quickly.
Above: Mike Cannon-Brookes, co-founder of Atlassian (Image: Atlassian Developers)
Enter Mike Cannon-Brookes, the billionaire co-founder of Australian software firm Atlassian, and a booster of the new energy economy. When Elon Musk said he could solve South Australia’s energy crisis in 100 days, Cannon-Brookes offered to help sort out the local political and financial scene, if Musk could offer “mates rates.” Thus began a colorful exchange that captured the public imagination all over Australia, and far beyond. Musk promised Tesla could deliver over 100 MWh of energy storage in 100 days, or it would be free.
Above: Tesla Powerpacks providing grid-scale battery storage (Image: WCCFtech)
Presumably thanks to Mr. Cannon-Brookes’s influence, Musk soon spoke with Premier Weatherill, and with Australian Prime Minister Malcolm Turnbull, who thanked Musk “for a great in-depth discussion today about energy storage and its role in delivering affordable and reliable electricity.” Things have escalated quickly. The neighboring Australian state of Victoria recently announced its own plans to invest $20 million to install up to 100 MW of grid-scale energy storage by 2018, and there’s now talk of Tesla being involved in that project. Cannon-Brookes envisions 1 GWh worth of new storage projects across Australia in the near future.
Above: Back in 2015 after a Tesla factory visit, Australian Prime Minister Malcolm Turnbull noted, "Batteries have the potential to revolutionise the energy market." (Source: TechAU)
“I don’t know what the definition of ‘politics sorted out’ was, there wasn’t really a plan there, but we’ve now had the various Premiers and the Prime Minister talking to Elon on the phone about storage,” Cannon-Brookes told Reuters. “I don’t think it will be challenging to get the funds for at least one, if not more, large-scale battery installations.”
Above: Renewable energy initiatives across Australia (Image: Energetics)
What’s amazing about this whole exchange is the public and no-nonsense way in which it is being conducted. It’s rare for companies and governments to discuss business in a public forum (yes, Twitter can be used for good), and it’s unheard-of for companies to publicly disclose pricing for pending deals, as Tesla has done. Musk quoted a price of $250 per kWh (for the battery packs only - inverters, logistics and installation will add additional costs).
Above: Tesla store in Sydney, Australia (Image: Car Advice)
Naturally, as word of the rapidly materializing deal spread, several local companies have chimed in, saying that they can match Tesla’s offer of 100 MWh in 100 days. The state government has now announced that it will put the project up for competitive bids. Australian firms Zen Energy, Lyon Solar, Carnegie Clean Energy and others are expected to compete with Tesla for the business. “I expect you will see lots of applications,” said South Australian Treasurer Tom Koutsantonis. “This will provide an incentive for more forms of storage. Storage is the next phase of the evolution of renewable energy.”
Above: As an example, Tesla CTO JB Straubel talks about how Tesla Powerpacks have been instrumental in recent Hawaii-based grid projects (Youtube: NBRbizrpt)
The tweet heard round the world has prompted movers and shakers in several other countries, from New Zealand to Argentina, to contact Musk and ask for similar deals. After Musk told a tweeter from the Ukraine that he would offer the same price for a similar project in that country, Ukrainian Prime Minister Volodymyr Groysman contacted Musk and offered to talk over the details of the proposal.